Thu. Apr 2nd, 2020

Forex InfoBook

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Forex Brokers and EU Regulation

EU Regulation Forex brokers are overseen by agencies in each member country of EU for regulating financial services in their own country. The complete list of European Regulatory Bodies is:

  • Austria: Financial Market Authority (FMA)
  • Belgium: Banking Finance and Insurance Commission (CBFA)
  • Bulgaria: Financial Supervision Commission of Bulgaria (FSC).
  • Croatia: Financial Services Supervisory Agency
  • Cyprus: Cyprus Securities and Exchange Commission (CySEC).
  • Czech Republic: Czech National Bank
  • Denmark: Danish Financial Supervisory Authority (Danish FSA)
  • Estonia: Finantsinspektsioon
  • France: Autorite des Marches Financiers (AMF)
  • Germany: Federal Financial Supervisory Authority (BaFin)
  • Greece: Capital Market Commission
  • Hungary: Hungarian Financial Supervisory Authority
  • Ireland: Central Bank of Ireland (CBI)
  • Italy: Commissione Nazionale per le Società e la Borsa (CONSOB)
  • Latvia: Financial and Capital Market Commission
  • Lithuania: Securities Commission of the Republic of Lithuania. 
  • Luxembourg: Commission de Surveillance du Secteur Financier (CSSF)
  • Malta: Malta Financial Services Authority (MFSA)
  • Netherlands: Authority for the Financial Markets (AFM)
  • Poland: Polish Financial Supervision Authority (KNF)
  • Portugal: Portuguese Securities Market Commission (CMVM)
  • Romania: Romanian National Securities Commission
  • Slovenia: Securities Market Agency (ATVP)
  • Spain: Comisión Nacional del Mercado de Valores (CNMV)
  • Sweden: Financial Supervisory Authority of Sweden
  • United Kingdom: Financial Conduct Authority 
  • Iceland: Icelandic Financial Supervisory Authority
  • Liechtenstein: Financial Market Authority (Liechtenstein) (FMA)
  • Norway: Financial Supervisory Authority of Norway

When brokerages state that they are EU regulated, what is meant by this is that they are regulated in a country which is signed up to the Markets in Financial Instruments Directive (MiFID).  The MiFID  ties all these national regulators together.

This allows for brokerages regulated in one European Economic Area (EEA) country to then offer their services to clients throughout the EEA. This means it’s possible for a brokerage regulated in Cyprus to take on clients in the United Kingdom without having to gain an additional regulatory licence in the United Kingdom.

For Retail Forex trading, we recommend Brokers regulated with FCA (UK) or ASIC (Australia) since they offer excellent trading conditions and fund safety at the same time.

Click here to read more about why Forex brokers regulated by the Financial Conduct Authority (FCA) are preferred by most professional Forex traders and High Net Worth individuals.

Click here to read more about why ASIC regulated brokers is very popular choice for Forex traders?

ESMA regulations

The European Securities and Markets Authority (ESMA) is the supervisory authority that safeguards consumers and strengthens financial markets in the EU. ESMA regulations are aimed at:

  • Increasing investor protection
  • Promote stable and efficient financial markets
  • Create an “EU-wide financial markets watchdog”

Retail Forex traders having accounts with brokers regulated by ESMA face the following restrictions :

  • A leverage limit of 30:1 for major currency pairs, 20:1 for non-major currency pairs, and 2:1 for cryptocurrencies,
  • Stop out levels have been increased to 50% of trading accounts. This enables brokers to apply margin calls a lot earlier than before.
  • Restriction on incentives and brokers are banned from offering bonuses

The ESMA regulation ensures

  • Negative balance protection
  • Standardization of a risk warning showing the average retail investor’s percentage of losses on CFDs accounts.

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